Navigating Tech Resource Challenges for Fintech Startups
As a startup, you know the importance of having a strong, capable and flexible tech team. It is pivotal to your success at this embryonic stage. However, finding and retaining tech resource can be a major challenge, especially with limited resources. According to a survey by Deloitte, 59% of startups in the UK reported that finding the right tech resource is their top HR challenge.
The World Economic Forum predicts that 97 million new roles will be created by 2025 as humans, machines and algorithms increasingly work together.
This highlights the significant growth in demand for tech resource globally, as the technology sector continues to expand and drive innovation across all industries. It also highlights the importance for businesses to stay innovative in their approach to resourcing, leveraging what has now become a truly global workforce.
The team at BrightBox Group has first-hand experience with the specific technological demands and rapid growth pace of fintech startups. We also know the importance of selecting trustworthy resourcing partners.. and we have the battle scars to prove it.
Neville Roberts and Stuart Houghton, co-founders of Planixs, signing their first deal with a large UK bank.
During our first startup journey building Planixs, a now successful fintech business, our biggest challenge was in finding and working with someone who had been through what we were about to go through. Someone that understood what external parties (such as future investors) would be looking for in establishing a team, and who knew what it took to fuel a start-up. When speaking with fellow fintech startup founders we discovered that they all experienced the same challenge, and were fed up with working with those that were just trying to get a resource sell over the line.
So we set out to raise the bar, developed strong partnerships with high-calibre resource in emerging markets, and designed innovative resourcing models to meet the resourcing needs of fintech startups like ours. This led to BrightBox Group and what you see today.
7 years on, and we are well-positioned to help you avoid resourcing pitfalls and find the right people to bring your vision and mission to life!
Key areas to consider when resourcing your fintech
Protecting your IP
If one, or your sole method, for finding the right tech resource for your startup is via a resourcing partner, it is absolutely vital that you protect your intellectual property (IP) at all costs, after all this is your secret sauce! Review your contracts to ensure you have a clear understanding of who owns the IP and under what conditions.
Many resourcing firms won’t engage with startups because of the financial risk and volatility associated and will sometimes use IP as leverage. With BrightBox, IP is always owned by the client. Due to the high level of risk involved in the startup industry, it is common practice to transfer ownership of IP only after the client has paid each of their monthly invoices. This approach helps mitigate the risk for the service provider when working with a client that has little or no prior trading experience.
Heed this advice: be critical of your intellectual property (IP) ownership and safeguard it at all costs, but consider the issue from both sides.
Scaling too quickly or too slowly
Scaling your tech teams too quickly or too slowly both carry risks that can negatively impact the success of your company. Scaling too slowly results in missed opportunities, an inability to meet your customer’s demands, and stagnation. On the other hand, scaling too quickly risks that the infrastructure of your business cannot support the speed of growth. In addition, scaling quickly means your cost base will dramatically increase. It is important to work with a resourcing partner that is responsive to changing conditions and that will support your business with scaling up and scaling down your capacity quickly.
Hiring the wrong people
According to a 2021 survey by the CB Insights, 14% of startups that failed cited team problems as a contributing factor. Hiring the wrong tech resource can have a significant impact on a tech startup. Poor hiring decisions can result in a lack of technical skill, misaligned team dynamics, and other challenges that can negatively impact a startup's ability to succeed. By failing to carefully assess the fit and capabilities of potential tech hires, you’ll risk hitting a number of challenges that could be otherwise avoided, highlighting the importance of finding the right tech resource for their team.
Overpaying for tech resource
It's so easy to pay over the odds for tech resource. Especially if this is your first foray into hiring (without the comfort of a large HR team wrapped around you) and you’re a startup with limited resources and you need to build your team quickly. Overpaying can limit your ability to invest in other areas of your business that may be important for growth and success. In addition, overpaying for tech resource will attract individuals who are more interested in compensation than the mission and vision of the company.
When resourcing, make sure that you know what the market-relevant rate is for the skills you need and use this as a reference point. You can find the going market rates on job boards online, in industry reports (e.g. itjobswatch), professional organisations, by asking around in your network, or through your resourcing partner who should want to get you the optimal answer. If you do consciously look to pay more, because you need to move quickly on highly skilled resource, make sure that you get the value you are paying for, and always get references.
Startups operate at a faster speed, and as a founder or tech leader you’ll likely be wearing many hats that require your attention all the time, but skipping this vital step can cost you dearly and require that you repeat the hiring process all over again.
Competition for resources
The UK has a highly skilled and educated workforce, with a host of world-class universities producing a steady stream of tech-savvy graduates. However, competition for the best and brightest is fierce, with many tech companies competing for the same pool of resource. With a limited pool of resources and a high demand for skilled workers from more established tech companies, fighting for that resource can be a major challenge.
Working on your company overview, the benefits that others wouldn’t normally offer (such as share options) can really help position your startup well…add to that the fact that it is an exciting opportunity that offers amazing job growth at pace, and you start to have a winning formula. Working with a tech resourcing and capability partner like BrightBox, who can help with this pitch, will unlock a sea of skilled and experienced tech resource in the UK and beyond that has been pre-vetted for you.
Being afraid to engage remote working/nearshoring
Effective communication is critical for a startup. While having everyone in the same room can be ideal for effective communication and collaboration, it's not always the best answer. In addition, embracing tech resource from other countries and cultures can bring such a wide range of views to the table that can be worth their weight in gold. Remote work offers a more flexible and cost-effective alternative, but make sure you have the right tools and systems in place to support effective communication and collaboration.
Don't just hire in your vicinity, break the location barrier and resource for skills and experience instead. This will give you access to a greater pool of skilled tech resource to choose from, and likely optimise your resourcing costs.
Offshore Vs. Nearshore for Startups
It is widely believed that using offshore resource as a resourcing strategy is an effective way of delivering tech resource for the most competitive price. This might be true for larger enterprises that have highly advanced processes, documentation and large established teams, but not necessarily for startups.
Offshore is ideal for larger enterprises as offshore resource work around the clock and in a very methodical way against documented briefs. If you have not written it down, it will not be done, or it will be lost in translation, so it’s difficult to build a trusting and proactive working culture for a company at such an early stage.
Using offshore resource for your startup means your team will be working in different time zones than your core team, which can make collaboration much harder. Naturally, this may not be what you want, especially when there’s so much personal attachment to the project because you’re all in it together in the early stages.
Nearshore resource are ideal for startups and will provide you with the technical skills that your startup needs in a time-zone that is likely to be no more than +/- 2 hours. You will also benefit from a cultural crossover, and your nearshore team will be solving problems together with you and you will be making significant cost savings in the longer term.
The team at BrightBox have ample experience in helping clients work through various hybrid resourcing strategies and can help you with this.
Lack of in-house expertise
Startups may not have the in-house expertise needed to build and maintain the complex systems required for a successful fintech operation. A hybrid resourcing model can be an effective solution. To minimise expenses, and ensure quality infrastructure, output, and business continuity, you can retain senior tech leaders and IP creators in-house while supplementing with nearshore resource. Nearshore tech resource offers several benefits for startups, including optimising costs, cultural alignment, time-zone alignment and access to a wider pool of resource to choose from. In addition, by its nature, flex resource can afford your startup the ability to scale up or down as required.
Failing to retain resource
Retaining skilled resource is critical for the success of any fintech startup. It's important to create a culture that supports and motivates your team and provides opportunities for growth and advancement. In the early days, it is hard to find the right balance between salary increases and driving the cost base of the business up, especially when it is in that ‘ideation’ stage. So considering alternatives, such as stock options, celebrating the milestones with a cost-effective event, or even just getting the team together on a regular basis can act as a great way of retaining that resource.
Integration with legacy systems
Many fintech startups need to integrate their technology solutions with their client’s legacy systems. This can be a complex and time-consuming process, requiring specialised technical knowledge and resource. Startups may need to allocate additional tech resources, such as software engineers, API specialists, and quality assurance specialists, to manage the integration process which can significantly impact on resourcing budget.
A way to mitigate this is to build the base platform or product and use it to foster interest from prospective clients. Clients will often be open to co-investment to build out your integration points. The client will benefit from reduced rates and licence fees, and you will be able to invest in the resource you need to build the integration points. Win/Win. Note of caution though, make sure that you always retain the IP around APIs.
Security and regulatory compliance
Fintech startups must adhere to strict security and regulatory requirements which can be challenging given the rapidly changing nature of technology and the regulatory landscape. This requires specialised expertise and resources that can be difficult to secure. When you work with a tech resourcing partner with fintech expertise, you are able to access a wider pool of specialised resource that can meet those requirements, enabling you to focus on what you do best, while your resourcing partner finds you those specialist resources to help take care of those niche requirements.
Staying current with technological advancements
Fintech startups must stay current with the latest technology advancements in order to remain competitive. This requires a significant investment in training and development for existing technical staff which you might not have as an early-stage startup. Working with a resourcing partner, you will have access to a pool of onshore and nearshore resource with the relevant skills and experience you need to get you up and running whilst you establish what you want to do longer term.
Be open to creative commercial models
Any startup always has a level of risk attached to it, the main one being that it simply runs out of cash and is unable to pay its way. This will be at the top of the list for any resourcing partner, and this is why BrightBox has created a number of commercial models that help manage that risk, enabling the startup to gain access to the resource it needs to give it the best chance of success.
How BrightBox Group Can Help
Having a key resourcing partner to advise you on your journey is great, but partnering with a company like BrightBox, which has first-hand experience and insight into what it takes to build a fintech startup is what can really give you a competitive advantage. Consider all the points above, and you’re already on a great path to success, and should new challenges arise, you can always reach out to us. Our unique approach to tech resourcing.
Customised resourcing models
Our innovative resourcing models enable fintech startups to benefit from cost-effective onshore and nearshore resources, –without sacrificing quality. Whether you need a dedicated team, a part-time resource, or a project-based solution, we have a resourcing model that will work for you. And because we have developed strong partnerships with skilled resource in emerging markets, we are able to provide you with high-quality resource, on time, every time.
Inside consultative approach
We don’t do one-size-fits-all, and we don’t do quick transactions. We are proactive and responsive, and we work with you as an extension of your team to support you with your short and long-term resource planning, ensuring you have the right team in place, now and long into the future.
Expertise in building fintech startups
As fintech startup founders, we have the unique advantage of having first-hand experience in navigating the challenges of tech resourcing. We know what to lean into, and we know what to avoid, being able to spot pitfalls and red flags a mile away.
Resourcing is a critical challenge for fintech startups, we know this, we’ve been there, and as you can see, we have the battle scars to prove it. With the right approach and the right resourcing partner, it's possible to find and retain skilled resource without breaking the bank.
If you're looking for a flexible, cost-effective, and experienced solution for your tech resourcing needs, get in touch here. We love hearing from you.
